International Wealth Management has been one of the bright spots during a three-year restructuring in which the lender’s Chief Executive Officer shrank the trading unit in a pivot to private banking that mirrored a similar move by rival UBS Group.
Monday 18, March 2019
(Bloomberg) --Credit Suisse Group is targeting CHF 2 billion ($2 billion) in pre-tax profit for 2019 in its key wealth-management unit, seeking a fourth consecutive year of profit growth for the division.
Iqbal Khan, the Head of International Wealth Management, told staff at an internal company event last week that he’s aiming to boost pre-tax profit from CHF 1.8 billion last year. Earnings at the level he’s targeting would exceed estimates: analysts polled by the bank predict profits to be little changed.
With market volatility returning and the global economy slowing amid trade tensions, even that relatively stable business isn’t immune as falling stock markets erode revenues.
Credit Suisse’s shares have lost about 30 per cent in the past year, compared with a 29 per cent drop at UBS.
Khan plans to give greater powers to the regions and boost collaboration with other units at the bank, such as the advisory business in the investment bank.
Credit Suisse said that the bank has only one financial target, which is a return on tangible equity for 2019 of 10 per cent to 11 per cent. That number stood at 6 per cent for 2018, still being dragged down by restructuring and high funding costs.
JPMorgan Chase analysts led by Kian Abouhossein have said that Credit Suisse may not reach that target in 2019.
While the bank’s CEO, Tidjane Thiam, has over-delivered on cutting the bank’s cost base the ongoing under-performance of its investment-banking strategy remains a drag on valuations.
Khan’s division increased pre-tax profit by more than half between 2016 and 2018. A former consultant and CFO of Credit Suisse’s wealth unit, Khan is seen as a potential successor to Tidjane Thiam.